Social relevance

Tuesday, January 22, 2013

Will social media tools and EMS transform transportation and logistics communications?

By Eric Johnson

Facebook, Twitter, and LinkedIn are all household names at this point, public vehicles of informed connectedness under the broad, but opaque moniker of “social media.”
But at their heart, these tools are about one thing: a different way of communicating.
The question for logistics practitioners is: Do the underlying concepts behind social media have practical applications in the freight transportation and logistics management fields? The answer almost certainly seems to be yes, but that leads to another, harder question. Will that impact be significant?
To frame the discussion, it’s also important to look beyond what we recognize today as purely “social media” tools to more true business-to-business platforms like enterprise messaging systems (EMS). While an EMS might be far removed from LinkedIn or Twitter in terms of audience and architecture, in terms of supply chain uses, they are both largely about finding different and more efficient ways to communicate information.
EMS is essentially a system that enables messaging between different platforms or modules across an enterprise. That system links people and programs within a single company, or perhaps even to its customers and partners. But a typical EMS’ reach does not extend to the type of community inherent in social technologies. The scope is more limited.
In the context of freight transportation and logistics, the use of an EMS today might be confined to an internal messaging system bundled into a suite of software, or more likely in a broader enterprise resource planning (ERP) system.
In December, a company called Infinite Convergence (IC) launched an EMS that was aimed in part at supply chain functions. The compelling back story of Infinite Convergence was that it was a spinoff of Motorola Networks, the product development infrastructure business of the famed telecommunications giant that was broken up in 2009. IC’s role was to develop the infrastructure behind messaging systems for mobile networks.
John Puma, vice president of product management and business development at IC, said EMS can play a role in linking disparate parts of a supply chain. More importantly, it focuses on the form of message delivery that is most effective, which is also at the heart of what makes social media so compelling.
“It’s really about what are the most effective ways of communicating with people,” he said. “Out of email, voicemail, or SMS, we found that most people will respond to a text or message delivered to a mobile, more than a voicemail or email. The difference in the latency for when the message is delivered or read is lower for texts. From a commercial and business perspective, companies are integrating messaging more and more into their enterprise software. This is really in its early stages. New technologies are coming out.”
In December, IC released an EMS product aimed at bridging the business operations communication gap across enterprises via a cloud-based mobile messaging service.
“The end point is a mobile telephone number, which everybody has,” Puma said. “Say they’re using email to connect to partners about a delivery or pickup. It’s fairly simple to take those entry points in the application and redirect those as messages as opposed to mail, so they’re more apt to read that.”
Puma sees several logistics-based applications.
“If your shippers have a relationship with third party software developers, this service could be integrated into these applications to help with communications,” he said. “The other way is similar — an IT department at a shipper where they’re maintaining the software themselves. They would be looking at ways to improve communication. The end goal is to overall improve the top line, so it may be part of a larger set of activities. Those are the two ways in.”
In the future, he said, the service could be adapted to give end customers notifications of delivery changes based on upstream events in the supply chain.

Potent Blend. It’s in this way that EMS capabilities closely resemble the potential power of social technologies to impact the relationship between shippers and their carriers, suppliers, 3PLs, and end customers.
Steve Banker, service director for supply chain management at ARC Advisory Group, said the next evolution is blending social media with applications in a more seamless way. He pointed to Infor, the third biggest ERP provider (after Oracle and SAP), which also offers a warehousing management module and a light transportation management system.
“What they have done I find fascinating,” he said. “Social media, in-line analytics (focused specifically on a process step), and the actual application are joined together.”
Companies subscribe to Infor’s platform and become part of a group that can tackle issues in a collaborative manner rather than in a transactional one.
“Let’s say I’m an account manager, and I sell to Walmart,” Banker said. “Any time a purchase order goes out, that’s an event. If there’s going to be a delay in shipping something to Walmart, I want to know, but it’s not enough to know. I want to be able to do something. I belong to this social community, I’ve made sure the warehouse and transportation managers are linked into this. I punch this out from this application to their attention, and I start to resolve this using social media. It’s a perfect example of how social media can be blended into this process.”
Many providers would argue this connectedness already occurs today. GT Nexus, for example, has long held that its cloud-enabled environment allows for physical supply chains to be collaboratively managed in much the same way someone would update information on his or her LinkedIn account. A single change visible to all, with everyone alerted to that change.
Other vendors may say that event management capabilities largely cover the important alert messaging functions that an expanded EMS system might provide, though maybe not via the same infrastructure that would allow a text to be sent to a driver’s mobile phone. It’s also clear that logistics software developers have taken note of the way people consume social media and messaging, reconfiguring user interfaces with dashboards that resemble those they are now accustomed to in their off-duty lives.
As one logistics software executive put it to American Shipper, Twitter is just a mountaintop from which to blast information. For companies that haven’t invested in electronic data interchange (EDI), or embedded messaging systems, social technologies might go some way to replicating that.
But investment will be critical to integrating social technologies in a systematic way into the supply chain process.
“Some of this stuff happens at the infrastructure level,” Banker said. “You buy an ERP, and you have this system with core middleware, which includes messaging. So you can think of this as the foundation of the building. So it’s happening at a foundational level, not at an application level.”

Risk And Demand. There appears to be two prominent areas where social technologies can directly impact supply chains, Lorenzo Martinelli, E2Open’s senior vice president of corporate strategy, said in a webinar in December on the relevance of social media to the supply chain, held by Supply Chain Management Review.
First is by mitigating supply chain risk — in other words, using the unmitigated communicative properties of social media to alert the appropriate people up and down the chain about events that may disrupt the normal movement of goods.
Second, however, is in the area of demand-sensing. He gave an example: say a high-tech manufacturer produces a product in white and black colors. It forecasts a 50-50 split in sales between the two colors. However, social media chatter suggests the white color will be much more popular, to the tune of an 80-20 split. Could that chatter somehow be integrated into the manufacturer’s supply chain?
The demand sensing component could well be something more useful for the procurement department, or even marketing. But it will eventually have an impact, whether direct or indirect, on transportation and logistics.
E2Open, whose network has 32,000 trading partners, surveyed 26 of its customers for an in-depth look at how social technologies might be applied to their supply chains. They were asked whether social tools and media could improve collaborative execution capabilities, and if so, how? They were also asked about the barriers to achieving more value.
“Forecast accuracy is not very high, no matter how good the tools are,” Martinelli said. “Many customers were very interested in using social media to gain a better measure of actual demand. There’s no systematic way that customers we talk to use to monitor risk and sense demand using this kind of technology, because it’s all brand new.”

Short-term Applications. There are clearly more clear-cut ways that social and messaging technologies can make companies more efficient.
Martinelli said he was shocked to find from E2Open’s research how much companies still relied on regular two-hour conference calls, where everybody is required to attend even if they are needed for a small part of the meeting.
“And these spin-off into further regular calls with customers or suppliers,” he said. “When we asked for metrics — how many emails, how many meetings, how many conference calls — nobody really had any data.”
Martinelli said during the webinar that employees spend an inordinate amount of time dealing with communications, and suggested these “issues” get in the way of productivity.
Michael Chui, principal at McKinsey & Co., also spoke during the webinar about how social media can unlock the latent information stored away in people’s email inboxes.
“There’s a tremendous amount of organizational dark matter,” he said. “Information that’s actually very valuable, that’s trapped in people’s inboxes. How can you make that information more sharable, more searchable? Email is designed as a one-to-one communications medium. Just think about CC — carbon copy — it harkens back to another time.”
In a McKinsey survey of a range of industries — services and goods — it was clear that the benefits of social media were most keenly felt in sales and marketing functions. But, as Chui pointed out, that doesn’t account for the spend typically associated with the various functions of a company. For example, say in advanced manufacturing, the use of social media could be more valuable in operations and supply chains, because there’s a lot more spend in operations and supply chains than in marketing and sales.
“And as supply chains get more globalized and disaggregated, the importance of communicating and collaborating across the supply chain across different players increases over time,” Chui said.
McKinsey’s research found 90 percent of companies said they’re deriving a benefit from social media. “But to most, it’s a small benefit right now,” Chui said.
Where might it be best applied? As a replacement for much of the email activity that defines modern supply chain communications today. McKinsey found companies spend 13 hours per week on email.
“How can you use that 30 percent of time on email more productively?” he said. “They’re spending another 20 percent searching for information across their enterprise and another almost 15 percent communicating and collaborating internally. We think the effective use of social technologies can improve all of those functions considerably.
“Wouldn’t it be more powerful if the default way people communicate with each other (created) content was in fact searchable by others? So, in a supply chain for instance, all the emails flying back and forth. Wouldn’t it be more effective if all the players within the supply chain were able to search for that information that now isn’t stuck in people’s inboxes? Or perhaps being able to find expertise faster as well?”
Why hasn’t it happened already? Regulatory issues and concerns about security are chief reasons, Chui said.
“The No. 1 concern about social technologies was about security of competitively sensitive information,” he said. “So being able to manage this data that you want to communicate through social — communicate to the people you want to, and not to the people you don’t.”

Shipper takeaways

New disruptive technologies have the power to change the way partners in a supply chain communicate, including for freight transportation and logistics functions.

Expectations of social media’s impact are high, but actual use within supply chains is currently low.

Companies spend two-thirds of their time emailing, communicating, and searching for information internally, with vast amounts of information locked away in email inboxes.

Supply chain risk management and demand-sensing seem to be key applications for social media and messaging technologies in the logistics arena.